As part of my ongoing look at student loans and bankruptcy, today I’m reviewing a case where both a Federal Stafford Loan and a Federal William D. Ford Direct Loan were completely discharged in a chapter 7 bankruptcy.
According to court documents, the Plaintiff filed a voluntary petition for relief under Chapter 7 of the U. S. Bankruptcy Code, and on April 8, 2014.
On May 20, 2014, Plaintiff filed an Adversary Complaint, seeking a discharge pursuant to 11 U.S.C. § 523(a)(8) of the student loans held by ED (U.S. Department of Education). Plaintiff filed an Amended Complaint on June 10, 2014.
Plaintiff is indebted to ED pursuant to the applicable terms of two promissory notes. The first promissory note, executed on June 15, 2008, was to secure a Federal Stafford Loan. The second promissory note, executed on July 9, 2010, was to secure a Federal William D. Ford Direct Loan from ED.
As of the filing of this adversary proceeding, the total debt due and owing to ED, including principal, interest, and fees was $41,574.96, with interest accruing on the principal of the Stafford Loan at a rate of $3.87 per day and on the principal of the Direct Loan at a rate of $2.86 per day. As of January 7, 2015, Plaintiff owes ED a total of $42,112.28, which includes the principal and interest.
Considering the Debtor’s past and present future financial resources, and those that she can reasonably rely on for the future, the Debtor cannot maintain a minimal standard of living, and repay the debt to ED, and repayment of the debt would constitute undue hardship.
Plaintiff’s liability on the debt due to ED, owing on the Federal Direct Loan and the Stafford Loan evidenced by the Promissory Notes referenced herein above, are included in the general discharge entered in Plaintiff’s main bankruptcy case of January 6, 2014, and hereby discharged due to undue hardship.
IT IS THEREFORE FURTHER ORDERED that the Plaintiff’s liability on the debt due to ED be and is dischargeable and is discharged under 11 U.S.C. § 523(a)(8) (2005).
This case was filed by:
M. Dwight Robbins #34842 MO
Attorney at Law
P. O. Box 87
Fredericktown, MO 63645
(573) 783-6636 fax
The momentum seems to be turning slowly to allow people who are financially struggling to have a better chance of getting bankruptcy loans discharged and getting the legal fresh start bankruptcy allows for.
Attorneys like Robbins should be applauded for forging a way forward for people to find relief from loans they would otherwise drown under.
While the court documents do not identify the extent of the financial difficulty the Plaintiff was struggling under, the documents do claim the debt would never be able to be repaid and would grow forever.
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